10QSB 1 smnov2.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended November 30, 2002, Commission File No. 0-31601 SMART WORLD UNITED, INC. --------------------------------------------------------- (Exact name of Registrant as specified in its charter) Nevada Not Available ------------------------ ----------------------------------- (State of Incorporation) (I.R.S. Employer Identification Number) 14 Pico Crescent, Thornhill, Ontario L4J 8P4 ---------------------------------------------------- (address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (905) 731-0189 Not Applicable ---------------------------------------------------------------- (Former name, address or fiscal year if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No x ---------- ---------- The total number of shares outstanding of the issuer's common shares, par value $ .001, as of the date of this report, follow: 9,900,000 PART I - FINANCIAL INFORMATION Item 1. Financial Statements SMART WORLD UNITED, INC. (A Development Stage Company) Interim Financial Statements November 30, 2002 (UNAUDITED) SMART WORLD UNITED, INC. (A Development Stage Company) INTERIM BALANCE SHEET NOVEMBER 30, 2002 (UNAUDITED) November Year Ended 30, August 31 2002 2002 (Unaudited) (Audited) ASSETS Current Assets Cash $ - $ - ------- ------- Total Current Assets - - ------- ------- Other Assets Incorporation costs - - ------- ------- Total Other Assets - - ------- ------- TOTAL ASSETS $ - $ - ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ - $ - Advance from shareholder 2,045 2,045 ------- ------- TOTAL CURRENT LIABILITIES 2,045 2,045 ------- ------- Stockholders' Equity Preferred stock, authorized 5,000,000 shares par value $ .001: none outstanding - - Common stock, authorized 50,000,000 shares, par value $ .001, issued and outstanding - 9,900,000( August 31, 2002 - 9,900,000) 9,900 9,900 Deficit accumulated during the development stage (11,945) (11,945) ------- ------- Total Stockholders' Equity (2,045) (2,045) ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ - $ - ======= =======
The accompanying notes are an integral part of these financial statements SMART WORLD UNITED, INC. (A Development Stage Company) INTERIM STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30, 2002 (UNAUDITED)
From Inception Three Months Ended to November 30, November 30, 2002 2001 2002 INCOME $ - $ - $ - ------- ------- ------- OPERATING EXPENSES Professional Fees - - 1,500 Amortization Expenses - - - Administrative Expenses - - 10,445 ------- ------- ------- Total Operating Expenses - - 11,945 ------- ------- ------- Net Loss from Operations $ - $ - $(11,945) ======= ======= ======= Weighted average number of shares outstanding 9,900,000 9,900,000 ========== ========== Net Loss Per Share $ - $ - ======= =======
The accompanying notes are an integral part of these financial statements. SMART WORLD UNITED, INC. (A Development Stage Company) INTERIM STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED NOVEMBER 30, 2002 (UNAUDITED)
From (Inception) May 26,2000 Three Months Ended to November 30, November 30, 2002 2001 2002 Cash Flows From Operating Activities Net loss $ - $ - $ (11,945) Adjustments to reconcile net loss to net cash used operating activities: Stock issued for services - - 9,900 Changes in assets and liabilities Increase(decrease)in accounts payable - - - Increase in Other Assets - - - ------- ------- ------- - - 9,900 ------- ------- ------- Net Cash Used in Operating Activities - - (2,045) ------- ------- ------- Cash Flow From Financing Activities Issuance of common stock - - - Advances from shareholder - - 2,045 ------- ------- ------- Net Cash Provided By Financing Activities - - 2,045 ------- ------- ------- Increase(decrease) in Cash - - - Cash and Cash Equivalents - Beginning of period - - - ------- ------- ------- Cash and Cash Equivalents - End of period $ - $ - $ - ======= ======= ======= Supplemental Cash Flow Information Interest paid $ - $ - $ - ======= ======= ======= Taxes paid $ - $ - $ - ======= ======= =======
The accompanying notes are an integral part of these financial statements SMART WORLD UNITED, INC. (A Development Stage Company) Interim Statement of Changes in Stockholders' Equity From (Inception) May 26, 2000 to November 30, 2002 (UNAUDITED)
Deficit Accumulated Additional During the Common Stock Paid-In Development Shares Amount Capital Stage Totals Balance - May 26, 2000 $ - $ - $ - $ - Stock issued for services 9,900,000 9,900 - - 9,900 Net loss for Period - - - (10,445) (10,445) --------- ------ ------- ------- ------- Balance - August 31, 2000 9,900,000 $ 9,900 $ - $ (10,445) $ (545) Stock issued for services - - - - - Net loss for year - August 31, 2001 - - - (1,500) (1,500) --------- ------ ------- ------- ------- Balance - August 31, 2001 9,900,000 $ 9,900 $ - $ (11,945) $ (2,045) Stock issued for services - - - - - Net loss for year - August 31, 2002 - - - - - --------- ------ ------- ------- ------- Balance - August 31, 2002 9,900,000 $ 9,900 $ - $ (11,945) $ (2,045) Stock issued for services - - - - - Net loss for period - November 30, 2002 - - - - - --------- ------ ------- ------- ------- Balance - November 30, 2002 9,900,000 $ 9,900 $ - $ (11,945) $ (2,045) ========= ====== ======= ======= =======
The accompany notes are an integral part of these financial statements. SMART WORLD UNITED, INC. (A Development Stage Company) Notes To Interim Financial Statements November 30, 2002 (UNAUDITED) Note 1 - Organization and Summary of Significant Accounting Policies: Nature of Business SMART WORLD UNITED, INC.(the "Company") was incorporated on May 26, 2000 under the laws of the State of Nevada. The Company's primary business operations are to and engage in internet related businesses. The Company is searching for a viable entity upon which to merge and/or acquire. The Company intends on going public in order to raise the funds required in order to fulfill its business objectives. The Company's fiscal year end is August 31, Basis of Presentation - Development Stage Company The Company has not earned any revenue from limited principal operations. Accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in Financial Accounting Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures required by SFAS 7 are that the Company's financial statements be identified as those of a development stage company, and that the statements of operations, stockholders' equity (deficit) and cash flows disclose activity since the date of the Company's inception. Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. In the opinion of management, these interim financial statements include all adjustments necessary in order to make them not misleading. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considered all cash and other highly liquid investments with initial maturities of three months or less to be cash equivalents. Net earning (loss) per share Basic and diluted net loss per share information is presented under the requirements of SFAS No. 128, Earnings per Share. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the period, less shares subject to repurchase. Diluted net loss per share reflects the potential dilution of securities by adding other common stock equivalents, including stock options, shares subject to repurchase, warrants and convertible preferred stock, in the weighted-average number of common shares outstanding for a period, if dilutive. All potentially dilutive securities have been excluded from the computation, as their effect is anti-dilutive. SMART WORLD UNITED, INC. (A Development Stage Company) Notes To Interim Financial Statements November 30, 2002 (UNAUDITED) Fair Value of Financial Instruments The carrying amount of advance from a shareholder is considered to be representative of its fair value because of the short-term nature of this financial instrument. Income Taxes The Company accounts for income taxes under SFAS No. 109, which requires the asset and liability approach to accounting for income taxes. Under this method, deferred tax assets and liabilities are measured based on differences between financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse. Note 2 - Capital Stock Transactions The authorized capital is 50,000,000 shares of common stock at $.001 par value. The Company has issued at total of 9,900,000 shares of common stock for services rendered as administrative expenses at a cost of $9,900 which has been expensed in prior periods. Note 3 - Advance from Shareholder An officer of the Company advanced cash to the Company for start-up incorporation costs of $545 and to pay certain accounts payable totaling $1,500. These advances are unsecured, bear no interest, and are due on demand. Note 4 -Income Taxes There has been no provision for U.S. federal, state, or foreign income taxes for any period because the Company has incurred losses in all periods and for all jurisdictions. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets are as follows: Deferred tax assets Net operating loss carryforwards $ 11,945 Valuation allowance for deferred tax assets (11,945) ------- Net deferred tax assets $ - ======= Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. As of November 30, 2002, the Company had net operating loss carryforwards of approximately $ 11,945 for federal and state income tax purposes. These carryforwards, if not utilized to offset taxable income begin to expire in 2017. Utilization of the net operating loss may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation could result in the expiration of the net operating loss before utilization. Note 5 - Going Concern: The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern. The Company operations are in the development stage and the Company has generated no income. The future success of the Company is likely dependent on its ability to attain additional capital to develop its proposed products and ultimately, upon its ability to attain future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. PART II - OTHER INFORMATION Item 2 - Management's Discussion and Analysis of Financial Conditions and Results of Operations THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE DISCUSSION CONTAINED IN THIS REPORT CONTAINS "FORWARD-LOOKING STATEMENTS" THAT INVOLVE RISK AND UNCERTAINTIES. THESE STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD" OR "ANTICIPATES" OR THE NEGATIVE THEREOF OR SIMILAR EXPRESSIONS OR BY DISCUSSIONS OF STRATEGY. THE CAUTIONARY STATEMENTS MADE IN THIS REPORT SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS REPORT. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THIS REPORT. Results of Operations For the three months ended November 30, 2002 the Company has not generated any revenues. Management's efforts to date have been devoted to focusing on raising capital in order to fulfil its business objectives. To date, management has been unsuccessful. The Company has incurred operating losses to date of $11,945 and will continue to incur losses until such time as an acquisition candidate is identified and, even if successful in acquiring a business or consummating a business combination, there can be no assurance that this business will be profitable. Liquidity and Capital Resources The Company has no cash. The investigation of prospective financing candidates involves the expenditure of capital. The Company will likely have to look to Mr. Marvin Winick or to third parties for additional capital. There can be no assurance that the Company will be able to secure additional financing or that the amount of any additional financing will be sufficient to conclude its business objectives or to pay ongoing operating expenses. Item 6 - Exhibits and Reports on Form 8-K Exhibit 11 - Computation of earnings per common share - see Statement of Operations Reports on Form 8-K - None Exhibit 99 Certification in connection with the Sorbanes-Oxley Act EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Form 10-QSB of Smart World United, Inc. (the "Company") for the period ending November 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Marvin Winick, President, CFO and Secretary/Treasurer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 14, 2003 By: /s/ Marvin Winick --------------------------------- Name: Marvin Winick Title: President, CFO & Secretary/Treasurer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. SMART WORLD UNITED, INC. BY: /s/ M. WINICK --------------------------- Marvin N. Winick, President Dated: March 14, 2003